President of the Manufacturers Association of Nigeria (MAN), Mansur Ahmed enjoined President Mohammadu Buhari who was just re-elected to continue his second term in office to address challenges bedeviling manufacturing sector and the dwindling economy of the country.
At present, Nigeria urgently needs a massive economic stimulus programme. If Buhari can surmount the energy problems, significantly increase spending in sector projects and programmes that boost the economy, generate employment and promote inclusive growth.
MAN urged the president to prioritise infrastructure, labour-intensive manufacturing such as textiles and footwear, agro-processing, youth entrepreneurship projects, as well as health and education.
The country has large stock of human and natural resources that are not being used optimally due to its huge infrastructural deficit. These range from dilapidated roads, epileptic electricity supply, acute water shortages, crumbling public buildings, grossly underfunded public tertiary institutions among others. The gap can be closed through public works projects executed with direct labour in the coming administration.
According to MAN president, the benefits of this are clear. These projects would provide temporary employment for unskilled workers in government-funded projects, which would enable these workers to gain experience needed for permanent jobs.
In addition, the targeted stimulus spending on productive and value-creating projects would spur growth, while also addressing inclusivity. The beneficiaries of economic growth in Nigeria have typically been politicians, workers in the oil and gas sector, high-level public officials, and executives of financial institutions. A vast majority of Nigerians are usually left out.
In spite the economic situation of the country, Buhari administration could possibly finance a massive stimulus spending, given dwindling oil revenues and a volatile global oil market.
Nigeria could follow the example of Asian countries that financed their stimulus programmes through domestic borrowing mainly by issuing government bonds. Borrowing money domestically in a local currency is nearly as problematic as external borrowing.
Notwithstanding, Ahmed pointed out that Buhari must first consider what policies will make this vision feasible. “When you are manufacturing, the first step is making an investment, so you want to look at the conditions that will make that investments worthwhile. The investment climate is key, and I think we all know this over the years. This Government has been working on improving the business environment as there have been several initiatives to improve the investments climate and thereby making investments and businesses easier for investors.”
Secondly, according to the MAN boss, there should be policies governing the development of infrastructure because as manufacturers depend on basic infrastructures such as electricity, water, transportation and others, the poorer the infrastructure, the higher the cost at which they can produce and deliver products to the market, “So, building infrastructure is one of the most critical responsibilities of government for industries as a whole to be more competitive.”
Also, there should be an improvement in the spending power of the ordinary people because the higher the spending power, the more demand for products. Ahmed made it known that, “putting more money in the pocket of ordinary Nigerian clearly creates more market for the manufacturers. Policies that help improve the income of the ordinary person is very important.”
The MAN helmsman added that policy against trade malpractices, such practices undermine the market and part of its major task is to ensure that government continues to make laws and regulations that discourage these practices particularly smuggling, counterfeiting and dumping which is the bane of some unscrupulous elements.
Fund has been an issue to finance projects by manufacturers. One major constraints of the manufacturing sector in Nigeria is that the cost of financing which is very high. For instance, funds to invest at 20%interest rate, an investor must make more than 20% for that investment to yield benefit. In other countries, it is less than 10% interest rate for investments, this means that you will have problem competing with manufacturers from those countries. Cost of financing a project is important and manufacturers must continue to work with government to encourage the financial systems to bring down cost of finance.
Ahmed stated further that given the current status in the manufacturing sector where a huge amount of manufacturing resources is spent importing inputs such as raw materials, spare parts, components and machinery, another area that is important to the manufacturing sector is the Foreign Exchange not only in terms of rate but whether it is steady or fluctuating. As much as possible manufacturers want a competitive foreign exchange rate and also to remain reasonably stable, if it fluctuates it makes it difficult to plan operations.
The MAN boss maintained the position of the association adding that trade is good and there are opportunities for manufacturers to grow if trading is expanded and made easier.
However, in the context of the ‘Continental Free Trade Agreement’ the position of MAN is that before you go into an agreement, a manufacturer must access his capability to benefit from that expanded trade with readiness to go into that kind of agreement. “I think this is just the fairest thing to ask in any situation like this, he added.”
Ahmed reiterated, “Once you know what the opportunities are and what are the risks, then you will know what you need to do to mitigate the risks and to exploit the opportunities and this was what we said at the beginning of the conversation on the African Continental Free Trade Agreement. I think, to some extent, we were misunderstood by people who thought we are saying ‘No don’t sign’, but what we are saying is first understand what the agreement is going to mean in reality to your industry, to your economy, and so on and be prepared to mitigate the risks and to take advantage of the opportunities that arise.”
This is what MAN asked for and it is clearly being recognized by government when it set up a committee to assess the readiness by investigating the pros and cons. This is also the costs and benefits of the agreement.
Ahmed submitted that it is important because if manufacturers understood what they have agreed on, they will be in a stronger position to know how to negotiate. He asserted further “Don’t forget, an agreement is something that is negotiable so if you don’t know what your goals are in the negotiation it’s impossible to negotiate effectively and that is what is happening.”
Obviously, if the government can improve power supply in the country, it will assist MAN and other small scale businesses to thrive.
Therefore, the new administration coming to governance as a continuity, has a lot to do so as to move the manufacturing sector to the next level.